Cyprus banks reopen with strict controls

CYPRUS banks opened this morning with tight controls imposed on transactions to prevent depositors from emptying the coffers in a bank run.

Cypriots are expected to descend in their thousands on the banks, which are opening almost two weeks after they were shut by the government as it negotiated a €10bn (£8.4bn) bailout package with the European Union.

The rescue deal is the first in Europe's single currency zone to impose losses on bank depositors, raising the prospect that savers will panic and scramble to get at their cash.

Authorities insist that strict rules imposed to prevent a bank run will be temporary, but economists say they will be difficult to lift as long as the economy is in crisis.

Strict controls, contained in a Finance Ministry decree, limit cash withdrawals to no more than €300 a day, ban the cashing of cheques and bar businesses from transferring money abroad unless they can show it is for imports.